Martin McGuinness, Sinn Fein's chief negotiator in the Northern Ireland peace process, has been appointed chief of staff of the IRA.

But far from signalling a threat to the IRA's ceasefire, the move, confirmed by security sources on both sides of the Irish border, has fuelled hopes that the terrorists are ready to destroy their weapons.

Senior British and Irish government sources last night described the IRA's appointment of McGuinness - a key architect of Sinn Fein's peace strategy - as a 'major breakthrough' in the stalled peace process.

The Observer has learnt that McGuinness, who is also Northern Ireland's Education Minister, was elected to the post by the IRA's seven-man 'army council' at a meeting in the Irish border town of Dundalk on 27 September.

Security sources said his appointment was a significant 'victory' over hardliners who had been bitterly opposed to handing over weapons.

But the political climate has changed dramatically in the wake of last month's terror attacks in America and the launch by President George W. Bush and Prime Minister Tony Blair of a global war on terrorism.

One of the most senior officers in the Royal Ulster Constabulary said: 'His elevation to that post fits in with the intelligence over the last two months. It seems there has been a very subtle shift in emphasis towards those who only see a political role for the movement now.

'The "politicos" are in the ascendancy but without causing a schism at the top.'

McGuinness is regarded by both governments as 'pragmatic' and open to a major IRA gesture on arms. Once one of the key advocates of IRA violence and second in command of the Bogside IRA on Bloody Sunday in 1972, McGuinness has played a pivotal role in the peace process.

He told BBC Northern Ireland last week: 'As far as I'm concerned it [decommissioning] couldn't happen quick enough_ if it happened tomorrow morning it would not be quick enough.'

The peace process has remained deadlocked over Unionist refusals to share power in the Northern Ireland Executive with Sinn Fein while the IRA hangs on to its weapons.

A senior Irish security source described McGuinness's elevation, which took place two days before Sinn Fein's annual conference last weekend, as 'a massive but totally bloodless coup'.

He said the 51-year-old had replaced Thomas 'Slab' Murphy. He added that McGuinness had also faced down objections to IRA decommissioning from Brian Keenan, a member of the army council.

The move to replace Murphy with McGuinness is seen by the RUC 'as the preparatory step towards some kind of decommissioning'.

Devolved government is set to collapse this week when Ulster Unionists resign in protest from the power-sharing Stormont coalition - four months after giving the IRA a deadline to decommission.

The RUC officer said: 'Putting McGuinness in place sets the ground for a big move but it will be done on the IRA's terms, possibly within the next seven weeks, rather than under any Unionist timetables.'